30 Oct Impact of Artificial Intelligence in Insurance
Insurance Industry is facing disruption which is ubiquitous. Enormous amount of data is what drives this disruption and evolution in the Insurance industry. More and more technologies get created to handle and manage this huge amounts of data which flows from all across in myriad forms via intranet, internet, offline and connected devices. Yes, data is all over the place and scattered in silos, success is when business decisions are derived from this data which is mainly in unruly forms.
Speed at which machines can process data complexity determines customer satisfaction scores and brand loyalty.
Now let us take a swift stride through one of the most impactful technologies which is helping Insurance Industry by dramatically altering workflows and boosting productivity.
Concept Breakdown – Artificial intelligence (AI)
Artificial intelligence (AI) is transforming the insurance industry as always in many unique manners. AI also known as Machine Intelligence is the kind of intelligence displayed by machines and this is disparate to the natural form of intelligence displayed by human beings. This field of study is commonly referred to as Learning of Intelligent Agents – a device which senses the environment and actuates some actions that lead to success.
In simple terms, Artificial intelligence is used to describe machines which mock cognitive functions like problem solving, reasoning and learning. AI commonly uses Artificial Neural Networks and contributes a lot towards reducing fraud and financial crimes. This is mainly achieved by perpetual monitoring of user behavior patterns to detect anomalies.
Role of AI-enabled devices in Insurance
Insurance industry thrives on meaningful data and this data is mainly gathered using numerous connected devices for crafting meaningful business insights. We see sophisticated wearables and associated connected devices which are put into use to collect health data, car accident status data etc which are highly critical for the insurance industry to improve process workflows and foster customer loyalty. Claims processing gets streamlined with minimum errors when the Insurance industry is able to put these collected data into good use, by analysing quickly and efficiently and deriving business insights at a finger snap.
Connected devices constantly interact with users on the go and formulates a strong communication pathway between the user and the Insurer in almost all critical incident situations.
The greatest impact of AI devices would be visible in the form of predominantly personalised Insurance Premiums. Connected devices are already successful and would keep on furthering and progressing the way in which Insurers would collect tech enabled customer insights and risk data.
Have a look at this summarized points:
- There is massive growth in data sources and when this is added with tech enabled data science we get highly personalized premiums.
- Technology facilitates quick connectivity, and wearables, telematics, IoT, smartphone apps etc equip Insurers to create highly personalised premium structure.
- Relationships exist across data sets and this can be used to frame business insights.
So the future is where users would be privileged to see premiums which are specifically customised based on different criteria, people of similar age and gender with similar cars or homes won’t be paying the same premium any more. Connected devices combined with data science capabilities would make this happen with greater accuracy and precision.
Challenges faced by Insurance Industry
The insurance industry is well known for its complexity and most of it is attributed towards complexity in data. Challenges are also on the rise, competition is growing too, latest digital native phenomena and greater stress on profitability all pave the way to increased demand for innovative products and solutions which would make the Insurer’s job easier. Subdued premium rates, lenient interest rates, shifting consumer habits, diminished economic growth etc are all challenges which are being faced by this industry through the ages
Major challenges faced by the Insurance industry are:
- Poor and ill-planned digital goal setting which hardly utilises enormous digital capabilities
- Hostile mindset shown towards Digital Analytics
- Peripheral treatment of marketing capabilities of social media and mobile
- Conflicts & Resistance amongst Distributors and ambiguous Insurers
- Steadily ascending stress on cost, customer expectations and competition
Areas in Insurance where AI can bring about an Impact
AI is being adopted strenuously by the Insurance industry to smoothen service delivery and meet the quality benchmark. AI can bring about considerable impact in the following areas:
- Choosing the most suited investment option based on risks, preferences and spending patterns.
- Regular/consistent optimization of customer investments and Insurance coverage
- Scrutiny/Analysis of Claims, Risk Computation & Prevention, asset Management.
- Unforeseen disaster-caused damage analysis
- Reckoning risk tolerance and evaluation for trading desks
- Insurance transaction analysis
How AI helps with Fraud Detection in Insurance
Insurance fraud is considered to be the second largest economic crime in America. Insurance claim fraud consists of mainly these actions:
- Amplification of a genuine claim
- Rendered accidents, injuries, thefts and many other types of losses
- Deliberate hiatus/exclusion of required information in applications
- Submission of erroneous information
Insurance industry is loaded with lots of data and by analyzing this massive data and identifying unique data patterns, customer behavior can be sketched with greater precision. New cases are never a challenge for AI mainly because this technology is adaptive in nature. Also it is capable of deriving connections between multiple factors and identifies fraud instances which are then passed on for human investigation.
Following are the ways in which Nuvento AI helps with Fraud Detection in Insurance:
- AI is capable of spotting fraudulent instances which lies hidden within huge amounts of data with increased accuracy, and that too quickly within seconds or a few minutes.
- Most of the hidden correlations are not easily detectable by human eye, AI does this job by sensing patterns amongst various claims
- New schemes of fraud would be easily discovered using the program by means of consistent review of current claims
AI Trends which would determine future of Insurance
Developments in AI is not just transformational but also disruptive in the Insurance scenario. AI would drive huge savings for insurance carriers, brokers and policyholders.
Few key trends which would influence the future of insurance:
- AI enables Rapid, Customized Claims Settlement – Smart and secure online AI interfaces combined with virtual claims adjusters would make the claims settlement process more efficient and easy. Customers get the freedom to choose as to whose premiums would be used to pay their claims (peer to peer insurance)
- AI delivers superior Customer Experience and Coverage Personalization – AI would enable a smooth automated buying experience which is seamless and chatbots would pull on user social data and geographic details for greatly customised interactions which deliver constant value. AI encourages on-demand insurance too which enables carriers to customize coverage for specific items/event.
- AI helps in crafting personalized Policy Pricing based on customer behavioral patterns – Pricing platforms these days enjoy the benefit of getting loaded with specific and personalized data which are routed via IoT sensors. Based on customer driving patterns premium is decided in case of auto insurance and people who are cautious about healthy lifestyle usually pay less for health insurance, this is called usage based insurance.
AI technology continuously re-fuels Insurance industry by means of total utilization of different digital applications and automating business processes. Future looks promising with AI empowering various tedious processes like claims analysis, risk calculation etc and AI powered products would include insurance coverage for smart sensors, smart driverless cars & factories and cyber crime damages.
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